A journey to discover the role of a real estate investor in cities that are changing, driven by new sustainability objectives and by the needs of public administrations and the communities that inhabit them. “For us at Cambridge, sustainability is not just a good investment from a real estate point of view. It is the heart of our corporate mission". Stéphane Villemain is CSR Vice President of Ivanhoé Cambridge, a Canadian real estate investor and developer with worldwide assets; his simple words explain the centrality of ESG issues in the investor approach in recent years.
Stéphane Villemain, CSR Vice President of Ivanhoé Cambridge
“As investors in real estate, we are aware that we have a fundamental role to play in improving people's quality of life”, Villemain emphasizes, “and we intend to carry out this task to the end. Social factors, in this respect, are extremely relevant to our investment analysis, in any transaction. An attitude that is reflected in our Corporate Social Responsibility (CSR) activities, especially with regard to promoting the health and well-being of those who live on our properties. I am not saying anything new by pointing out that the real estate sector has a direct influence on people's daily lives: after all, we spend 90% of our life inside a building."
Urban Stories videopill – quick chat with Stéphane Villemain at the COIMA Forum X 2021
Ivanhoé Cambridge's mission is developed along some priority lines: “our commitment concerns the revitalization of neighborhoods and the creation of unified spaces in which people can live, work and have fun. For this reason, our projects take into consideration both the habits of citizens and the services they need, guiding the design of urban spaces consistent with their needs."
An activity that involves urban regeneration and conversion of old buildings in a sustainable, stimulating and participatory perspective: "our urban solutions integrate social diversity, innovative urban design and energy efficiency".
Among the most relevant and at the same time less widespread aspects of sustainability in this kind of operations, there is undoubtedly the affordability, that is to say the ability to offer to people spaces of value that can be purchased at an expense comparable to the cost of living: " our residential portfolio” continues Villemain, “is well diversified and already includes several solutions within the reach of most citizens, especially in cities where the average cost of home ownership is high compared to the average household income. We are pleased to be able to say that a significant majority of our residential units are considered affordable, when compared to local market criteria".
Through this focus on affordability, several objectives are being pursued: improving the quality of life inside and outside the property, creating a healthy and resilient environment for a positive impact on communities, and the ability to attract citizens from different social backgrounds with competitive costs, to ensure spaces for meeting and exchange between residents.
From this point of view, the activity of Ivanhoé Cambridge demonstrates the role that ESG criteria are also playing in guiding investments with a long-term view: "ESG performance is today a fundamental component of the overall quality of a building. For this reason, a project with strong ESG credentials, as mentioned above, is often better positioned to adapt to future stakeholder expectations and reduce obsolescence risk", underlines Villemain, who adds: "of course the ESG criteria that are material in a given geographic area may be different elsewhere, and it is always important to study the territory and analyze the needs of those who live in those areas. In general, key ESG criteria include green certifications, plans to reduce energy and carbon intensities, and relevant characteristics from the point of view of health, well-being or ease of access to primaryservices."
A strategy that must be based on a close relationship with stakeholders and investors: "on this last point, the financial security of our depositors - which today represent nearly six million citizens of Québec - is central. Butmore generally, stakeholder engagement is an integral part of our daily work, through constant dialogue with tenants, business partners, employees, community representatives and suppliers. We are also working on ways of analyzing and measuring the social impact of our buildings and our initiatives". “We take the same approach in selecting our partners and in choosing our investments, regardless of the country concerned. For each partner and investment, we carry out rigorous investment, risk, reputational analyses which also include of course the consideration of environmental, social and governance (ESG) criteria. Ivanhoé Cambridge has been an investor in COIMA for years, in particular cornerstone in the COF II fund, with participation in different projects in the Porta Nuova and Porta Romana areas in Milan.
The ESG impacts of real estate animated the debate during the COP26 Conference, held in Glasgow in November 2021. An event in which real estate played a central role and which highlighted at least two crucial themes: "the first is refers to how the real estate sector can contribute to the reduction of global warming", underlines Villemain, "and for an investor, this involves reflecting both on the impact that climate change can have on our buildings, and, conversely, on what impact our projects can have on the environment".
One of the most debated data in recent weeks identifies real estate as responsible for about 40% of world greenhouse gas emissions. It's time to decarbonise, starting with real estate portfolios. "From this point of view", continues Villemain, "we are committed to achieving a net zero carbon portfolio by 2040, in line with the indications of the Paris agreement. Furthermore, we aim that as of 2025, each of our new development projects will be net zero from an operational carbon emission standpoint".
Europe is today the continent, together with North America, in which real estate is valuing more concepts such as flexibility and well-being.
An evident path also in the daily activity of Ivanhoé Cambridge: "in our development projects, we are increasingly adopting certifications such as WELL, designed to complement those already existing relating to sustainability, paying specific attention to the well-being of people and communities living in and around these places. Elements such as access to direct sunlight, thermal or acoustic comfort, proximity and ease of use of services and public transport are some of the priority elements in any project, whether for residential or office use."
Villemain dedicates his latest reflection to the offices: “we are observing a clear change in the role of offices. A transformation that began a few years ago and was accelerated by the pandemic: on the one hand the office remains an important factor in the attraction and retention of talents, essential to build the company culture and foster team collaboration and creativity, on the other hand, hybrid models with other types of workplaces are here to stay. At Ivanhoé Cambridge we are deeply convinced that this will be the priority model also in the future, with a new balance between remote working and presence in the office. The flexibility of spaces, which must allow users to easily adapt their premises according to their needs, is also an imperative. The office of tomorrow will also be a place of services, with emphasis on the customer experience. Tenants expect more from their offices, which should no longer be just workplaces but also real places to live and enjoy. It is therefore essential to offer them the most complete range of services in order to improve the quality of life of occupiers."
“For the future”, Villemain concludes, “we look to offices as increasingly specialized spaces, in which technology will play a prominent role. Proptech, the technology at the service of owners, tenants and occupiers, is contributing to the spread of smart buildings, capable of hosting advanced services for data collection and analysis, management and operational efficiencies. A path that seems extremely promising to us and which, in turn, will favor the achievement of new and even more challenging sustainability objectives."